“Use cases for the CDR are almost unlimited”: Arca

The consumer data right (CDR) has almost “unlimited” use cases however, rules surrounding the regime are hinging progress, according to the Arca.

Michael Blyth

Arca (previously Australian Retail Credit Association) is a consumer credit association that brings together organisations to boost data protection with members including 14 of Australia’s largest banks, mutual banks, consumer finance companies, fintechs and credit reporting bodies.

Last week, the Australian Banking Association (ABA) said it found that at the end of 2023, only 0.31 percent of bank customers took advantage of data sharing scheme, the CDR.

At the time, ABA CEO Anna Bligh said, “Despite the best efforts of government, regulators and industry, this review makes it clear that CDR has not realised its potential.”

However, Michael Blyth, general manager for policy and advocacy at Arca told Digital Nation, “The use cases for the CDR are almost unlimited; if the system can earn the trust of consumers.”

“Before that can happen, businesses must be convinced that investing in the CDR system as a data user is worthwhile.

“Lending and credit-related uses are the best way to promote adoption by businesses and consumers."

According to Blyth, CDR rules limit widespread use of the system with lenders needing “consistent and certain access to data to make the most out of the CDR e.g. assessing whether to lend to a customer.”

“The way the consent-based framework operates under the current rules, that simply can’t happen,” Blyth said.

He added this was a “contrast” to the use of CDR by brokers.

“Due to a quirk in the rules, they aren’t treated the same way as lenders. Brokers are deemed ‘trusted advisers’ and, once they have the data from the system, they don’t need to abide by the same restrictive limitations, which stop lenders using the data the way that they need.

“This is a great sign that if the government gets the balance right in the rules, the system will take off,” Blyth said.

Part of what is hoped will boost CDR uptake is ‘action initiation’ legislation which will enable easier account switching.

Blyth envisions consumer uptake growing once action initiation legislation has passed.

“Who wouldn’t want to sign up to a product offering where your credit card – or even your home loan – is flipped from one lender to another any time a better offer is identified?

“The CDR system can make that happen, but only once the government gets the balance in the rules right. We believe it’s important to fix what has already been implemented before moving on to the next major change,” he added.

Blyth explained that “ironically” the protections offered under the CDR “may make consumers more wary of using the system.”

“Australian consumers readily share sensitive, personal information without a thought to largely-unregulated social media companies overseas, but baulk at the restricted exchange of data, through well-regulated systems like CDR and credit reporting.

“It may take time and it may be boring, but the CDR will thrive when mainstream businesses begin to offer everyday products through the system.

Blyth said there is nothing more mainstream than a bank or other lender offering to streamline the application process for a home loan or credit card.

“If the government wants to see that happen, the fundamental design and purpose needs to be reviewed, and the rules simplified,” Blyth said.

Rehan D'Almeida, CEO of FinTech Australia has also come out in support of building CDR use cases.

“With use cases starting to emerge, the challenge now is to encourage the capture and sharing of data on uptake and usage in order to quantify the impact of the CDR,” D'Almeida said.

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